Slater & Gordon: Trial set for October
The trial of Slater & Gordon’s £637m claim over its acquisition of Quindell’s professional services division is set for October as the two sides continue also to argue over consideration still owing.
Slater & Gordon issued a claim [1] in June 2017 for breach of warranty and/or fraudulent misrepresentation for the £637m, plus interest in damages, that it paid for the PSD.
The deal led to a downward spiral that end with the firm being taken over by its lenders and the UK arm separated from its Australian parent.
In the newly published annual report of Watchstone – as Quindell is now known – the company said: “Whilst the group believes the claim is without merit, significant resources have been, and are expected to be, incurred in the defence of the claim.
“Clearly, in the event the claim should succeed in whole or in part this would have a substantial negative impact upon the group and, at worst, could leave the group unable to settle its debts as they fall due.”
It said that, until the case was resolved, it would not be able to distribute capital to shareholders.
Having spent £2.9m on the case during the last financial year, it has increased provision for total costs to £8.2m.
The deal contained an element of deferred consideration of up to £50m in relation to future receipts arising on noise-induced hearing loss cases which were live at the time.
The sale and purchase agreement provided that Watchstone would receive 50% of the net receipts but the report said it has received nothing to date “and no agreement has been reached as to a terminal value of the NIHL assets”.
It continued: “Therefore the provisions of the sale and purchase agreement will apply to determine the amount to be paid (if any) by Slater & Gordon.
“Based on the information supplied by Slater & Gordon (which is subject to dispute by the group) and the uncertainty of the outcome of the NIHL cases, the deferred consideration has been determined as £nil on the group’s balance sheet.”
Watchstone added that the long-running investigation by the Serious Fraud Office was continuing, while there had been no further developments on the threatened, but not commenced, shareholder class action [2] by Liverpool firm Camps, under its brand Your Legal Friend.
Last year, the Financial Reporting Council imposed discounted fines of £780,000 [3] on one set of Quindell’s former auditors, who it said had failed to “exercise sufficient professional scepticism”, and then £3m on KPMG [4], its later auditors.
Slater & Gordon was also rebuked and handed an £80,000 fine [5] for inspecting confidential client data during the due diligence that led to the acquisition.